Friday, February 24, 2017
Judge Rejects Cumulus' Refi Plan, Stock Drops
The decision by U.S. District Judge Katherine Polk Failla in Manhattan came in a lawsuit the Atlanta-based company filed in December, accusing JPMorgan Chase & Co of withholding consent to parts of its refinancing plan.
In its lawsuit, Cumulus said that JPMorgan's actions in its role as administrative agent under a 2013 credit agreement had threatened a deal it reached with bondholders that would deleverage the company by up to $305 million.
But JPMorgan and a group creditors who objected to the deal million of the company's loans disagreed and argued the transaction was not permitted under the credit agreement, a position Failla adopted. "I do not believe it permits the proposed refinancing," she said.
Cumulus Media shares fell sharply in Friday trading on the Nasdaq stock exchange as the ruling was announced from the bench. Its shares last traded at 75 cents, down 25 percent.
Cumulus said the deal would allow the company to retire the notes at a discount and avoid a "springing maturity" on the $1.8 billion in loans that occurs if more than $200 million of the notes are outstanding in January 2019. The deal was reached with a majority of Cumulus' senior noteholders. Cumulus said the refinancing must be completed by March 13, when the exchange offer is scheduled to expire.
The Cumulus lawsuit sought an order declaring that its credit agreement permitted it to use the revolving credit line as part of its refinancing plan and may amend a restriction that would enable it to access the credit line. It also sought an order requiring JPMorgan to undertake other actions necessary to effectuate the refinancing.
The case is Cumulus Media Holdings Inc. et al v. JPMorgan Chase Bank, N.A., U.S. District Court, Southern District of New York, No. 16-09591.
Posted 2:53:00 PM